KRA defies odds, posts improved growth

January 24, 2012

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KRA Commissioner General Michael Waweru/FILE

By Evelyn Njoroge, NAIROBI, Kenya, Jan 24 – The Kenya Revenue Authority (KRA) continues to defy the tough economic environment by recording improved growth, with the collections for the quarter between October and December 2011 rising by 8.9 percent to Sh177.2 billion.

Outgoing Commissioner General Michael Waweru pointed out that the Sh14.5 billion growth over what was posted in the second quarter of the 2010/2011 fiscal year, was registered against the backdrop of a ‘not so promising’ operating environment, which vindicated their increased efforts at mobilising revenues for the government.

“The slowdown that started in the second quarter of 2011 calendar year spilled to the third quarter during which the economy expanded by 3.6 percent. This affected our revenue collection during the period,” Waweru explained during a media briefing on Tuesday.

This slowdown was seen in the Road Transport Department whose collection dropped marginally by 1.3 percent to Sh702 billion. Customs Services and Domestic Taxes Departments on the other hand saw slight revenue growth rates of 3.1 percent and 12.3 percent or Sh61.3 billion and Sh115.1 billion respectively.

For the first half of the fiscal year to December, the revenues also went up to stand at Sh338.2 billion up from the Sh303.1b collected in the previous year.

Asked whether this was an indication that the taxman would fall short of its 2011/2012 targets where they envisage to collect Sh733.4 billion, Waweru exuded confidence that they could even surpass their mark.

“We always collect more in the second half of the year than in the first half of the year. We are going out of our way to make sure that we meet and exceed the target and claw back the shortfall that we may have accumulated in the first half,” he emphasised.

This is particularly so since the unfavourable economic climate does not show any signs of abating in the third quarter.

The measures they plan to employ include intensifying their debt collection which during the quarter saw them recover Sh4.3 billion.

KRA estimates that some Sh80 billion is in the hands of their debtors including some parastatals which would be pursued although the tax chief acknowledged that some of the arrears will have to be waived.

“The debt ledger is quite large but some of it will have to be waived. This however will be done on a case by case basis but hopefully, we will turn around some of it,” said Waweru of the exercise which he added would be tasking.

In addition, the implementation of their administrative initiatives such as the Integrated Tax Management System and electronic filing to enhance their revenue collection – as outlined in KRA’s fourth corporate plan which is in its final year- would continue.

Waweru was accompanied by the Commissioner General-Designate John Njiraini who disclosed that they would hold a retreat to discuss the fifth corporate plan which would guide him in his new duties as the tax chief come April.

“As the incoming Commissioner General, I will be working faithfully according to the priorities set out in that corporate plan,” he pledged.

He however pointed out that the implementation of a devolved system of governance as set out in the new constitution; the East African Community integration process and the automation of KRA’s systems will be among the key challenges they will have to deal with going forward.

The second phase of the automation of domestic taxes should be completed in the next one and a half year, a development he felt would enable the authority to interact with more taxpayers and thus improve their revenue collections.

Njiraini, whose appointment raised furore among some quarters, will be expected to spearhead the search for new avenues to mobilise resources at a time when the Treasury has targeted to raise a whopping Sh922.6 billion in revenues to finance the 2012/2013 budget.